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Can gold bullion rally substantially in a bearish market environment?

*Dow Theory Letters, by Richard Russell, February 27, 2009

“All in all, the market action is bearish and I don’t see any signs of improvement.

Dow/Gold — Back in the year 2000, one share of the Dow would buy 44 ounces of gold. As the Dow declined and as gold rose, the ratio between the two headed lower. Currently, the ratio is down to 7.71, meaning that one share of the Dow will now buy only 7.71 ounces of gold. At previous extremes, the Dow would buy close to only one ounce of gold. Whether we’ll ever see a ratio of close to 1 again, I don’t know. Subscribers often press me to guess at where prices will be when the ratio hits its low on this trip. If I had to guess, I’d venture $3500 gold and the Dow at 3500. Your guess is probably as good as mine.”

*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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